Realty sentiment plummets to 39-month low in Q3 2017

Realty sentiment plummets to 39-month low in Q3 2017
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Mumbai: Indian real estate sector’s future sentiment plummeted to 39-month low in June-September 2017 indicating a significant decline in optimism pertaining to its future performance, a recent survey said.

According to a survey jointly conducted by Ficci-Naredco-Knight Frank, the future sentiment score in Q3 2017 stood at 55, reaching its lowest point over the past 39 months.

“This indicates that the true impact of demonetisation and structural reforms such as RERA and GST have finally sunk into the industry,” the report said.

The report stated that majority of the stakeholders feel that the residential launches and sales are either likely to worsen in the next six months or hold steady to their current level, which itself is abysmally low.

Nearly 73 per cent of the respondents have opined that the residential price appreciation will either worsen or remain the same in the coming six months.

“Business sentiments in the recent history of real estate in India have hit the lowest levels of optimism. While sentiments are largely transient in nature, the prevalent mood in the industry reflects that it has finally come to terms with the short-term adverse impacts of the structural reforms that became a reality over the past around 12 months,” Knight Frank India Chairman and Managing Director Shishir Baijal said.

He further said there is also an evident slowdown in the economy with a steady decline in business performances and the dwindling of capital expenditure to worrisome levels.

“Going forward I feel that the next 12 to 18 months are likely to be the ‘under observation’ period for the real estate sector. Industry stakeholders should spend the period in reorienting businesses in line with the new order,” Baijal added.

According to the report, the office market is showing a much better future trend than the residential sector in Q3 2017.

Majority of the stakeholders foresee the office market to either improve or maintain the present levels over the next six months. Nearly 82 per cent of the respondents opine that office rental will either remain the same or would move up in the coming six months.

“The residential sector which decides the trajectory of the real estate industry in the country is likely to be under continued pressure for the next six months. The office market is relatively better off with majority of the stakeholders opining either a steady or improving leasing environment,” Knight Frank India Chief Economist & National Director – Research Samantak Das said.

PTI